Average rate of return methed, net present value method, and analysis for a service company The capital investment committee of Iguana Inc. is considering two capital investments. The estimated operating income and net cash flows from each investment are as follows: Warehouse Robotic Assembler Robotic Assembler Operating Warehouse Year Operating Income Net Cash Flow Income Net Cash Flow 1 $41,400 $134,000 $87,000 $214,000 2 41,400 134,000 66,000 181,000 3 41,400 134,000 33,000 127,000 4 41,400 134,000 14,000 87,000 5 41,400 134,000 7,000 61,000 Total $207,000 $670,000 $207,000 $670,000 Each project requires an investment of $460,000. Straight-line depreciation will be used, and no residual value is expected. The committee has selected a rate of 12% for purposes of the net present value analysis. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0.376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Required: 1a. Compute the average rate of return for each investment. If required, round your answer to one decimal place. Average Rate of Return Robotic Assembler Warehouse 1b. Compute the net present value for each investment. Use the present value of $1 table above. If required, round to the nearest dollar. If required, use the minus sign to indicate a negative net present value. L (I %o Robotic Assembler Warehouse Present value of net cash flow Amount to be invested Net present value 2. Prepare a brief report for the capital investment committee, advising it on the relative merits of the two investments. The robotic assembler has a ~ net present value because cash flows occur ~ in time compared to the warehouse. Thus, if only one of the two projects can be accepted, the ~ would be the more attractive